Financial News

CURO Group Holdings Corp. Announces Fourth Quarter 2022 Financial Results

CURO Group Holdings Corp. (NYSE: CURO) (“CURO” or the “Company”), a tech-enabled, omni-channel consumer finance company serving a full spectrum of non-prime and prime consumers in the U.S. and Canada, today announced financial results for its fourth quarter ended December 31, 2022.

Highlights

  • Gross Loans Receivables increased 34.8% year-over-year to $2.1 billion
  • Goodwill impairment of $107.8 million in U.S. Direct Lending and $37.4 million in Canada POS Lending

“2022 was a historical year for CURO as we completed our transformation into a full spectrum consumer lender focused on longer-term, lower credit risk products,” said Doug Clark, Chief Executive Officer. “While the macroeconomic headwinds associated with rising interest rates and inflationary and recessionary pressures on the consumer have delayed our ability to recognize all of the benefits of our transformation, we strongly believe in the strength and foundation of our businesses and ability to provide long-term value and returns to our investors.”

Consolidated Summary Results

We reported Net loss of $186.4 million ($4.60 loss per share) on total revenue of $217.2 million for the three months ended December 31, 2022, compared with Net loss of $28.9 million ($0.72 loss per share) on total revenue of $224.3 million for the three months ended December 31, 2021.

The $157.5 million increase in Net loss in the fourth quarter of 2022 compared to the same period in 2021 was primarily driven by a $174.9 million increase in other expense, offset by a favorable increase in benefit from income taxes of $12.1 million. The increase in other expense was primarily the result of a $107.8 million goodwill impairment charge recorded on the U.S. Direct Lending reporting unit during the quarter, a $37.4 million goodwill impairment charge recorded on the Canada POS Lending reporting unit, a $26.4 million increase in interest expense, $13.1 million of restructuring charges related to targeted U.S. and Canadian store closures and other cost saving initiatives and a $4.9 million net change in losses recognized on our equity method investment. The goodwill impairment charge on the U.S. Direct Lending Reporting unit was driven by rising interest rates, macroeconomic conditions and performance of recent acquisitions to date. The increase in interest expense in the fourth quarter of 2022 compared to the same period in 2021 was driven by (i) increased non-recourse asset-backed lending (ABL) borrowing to support organic loan growth and acquired portfolios, (ii) Senior Notes issued to fund in part our Q4 2021 Heights Finance acquisition, and (iii) an increase in benchmark rates on variable rate debt.

Net revenue decreased $8.3 million, or 6.4%, year over year for the three months ended December 31, 2022, primarily driven by lower interest and fees revenue attributable to our strategic change in product mix and the additional provision for loan losses driven by loan growth.

Year-over-year growth in Gross loans receivable of $539.5 million, or 34.8%, was primarily driven by an increase of $374.3 million or 81.5% in Canada POS lending as Flexiti continues to increase originations, and $111.4 million or 16.8%, due to the acquisitions of Heights Finance in Q4 2021 and First Heritage in Q3 2022 and an increase of $53.8 million, or 12.6%, for Canada Direct Lending due to organic loan growth, which was partially offset by the sale of the Legacy U.S. Direct Lending business in Q3 2022.

 

As of or Quarter-to-Date

 

Dec 31,

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

Delinquency and Loss Ratios

2022

 

2022

 

2022

 

2022

 

2021

31-60 days delinquency ratio

2.1

%

2.5

%

2.4

%

2.1

%

2.4

%

61-90 days delinquency ratio

1.2

%

1.5

%

1.8

%

1.9

%

2.0

%

91+ days delinquency ratio

2.5

%

2.6

%

2.0

%

2.2

%

2.0

%

Net charge-offs

14.8

%

13.2

%

24.0

%

23.2

%

24.4

%

Operating expense for the fourth quarter of 2022 was $126.0 million, a decrease of $13.6 million, or 9.7%, from $139.6 million in the prior year quarter primarily related to the divestiture of our Legacy U.S. Direct Lending business partially offset by the acquisitions of Heights Finance and First Heritage.

Funding and Liquidity

As of December 31, 2022, we had principal debt balances outstanding of $2.6 billion, which consisted of approximately 65.5% of fixed rate or hedged variable rate debt and 34.5% of variable rate debt. We had $73.9 million of cash and cash equivalents on the Consolidated Balance Sheet and available for general corporate purposes.

Unrestricted cash and cash equivalents, together with $125.6 million in unused borrowing capacity and $123.6 million of unencumbered Gross loans receivable, provides approximately $323.1 million in available capital resources.

About CURO

CURO Group Holdings Corp. (NYSE: CURO) is a full-spectrum consumer credit lender serving U.S. and Canadian customers for over 25 years. Our roots in the consumer finance market run deep. We’ve worked diligently to provide customers a variety of convenient, easily accessible financial services. Our decades of alternative data power a hard-to-replicate underwriting and scoring engine, mitigating risk across the full spectrum of credit products. We operate a number of brands including Cash Money®, LendDirect®, Flexiti®, Opt+®, Revolve Finance®, Heights Finance, Southern Finance, Covington Credit, Quick Credit, First Phase and First Heritage Credit.

Conference Call

CURO will host a conference call to discuss these results at 8:30 a.m. Eastern Time on Thursday, February 23, 2023. The live webcast of the call can be accessed at the CURO Investor Relations website at http://ir.curo.com/.

You may access the call at 1-833-953-2430 (1-412-317-5759 for international callers). Please ask to join the CURO Group Holdings call. A replay of the conference call will be available until March 2, 2023, at 5:00 p.m. Eastern Time. An archived version of the webcast will be available on the CURO Investors website for 90 days. You may access the conference call replay at 1-877-344-7529 (1-412-317-0088 for international callers). The replay access code is 3665641.

Final Results

The financial results presented and discussed herein are on a preliminary and unaudited basis; final audited data will be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Table 1 - Consolidated Statements of Operations

 

(in thousands, unaudited)

 

Three Months Ended,

 

 

Twelve Months Ended,

 

Dec 31,

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

 

Dec 31,

 

Dec 31,

 

2022

 

2022

 

2022

 

2022

 

2021

 

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

Interest and fees revenue

 

$

181,605

 

$

180,515

 

$

278,331

 

$

264,956

 

$

204,581

 

 

 

 

905,407

 

 

743,735

 

Insurance premiums and commissions

 

 

26,831

 

 

24,746

 

 

18,653

 

 

18,260

 

 

13,389

 

 

 

 

88,490

 

 

49,411

 

Other revenue

 

 

8,762

 

 

8,859

 

 

7,420

 

 

6,980

 

 

6,349

 

 

 

 

32,021

 

 

24,697

 

Total revenue

 

 

217,198

 

 

214,120

 

 

304,404

 

 

290,196

 

 

224,319

 

 

 

 

1,025,918

 

 

817,843

 

Provision for losses

 

 

94,849

 

 

78,399

 

 

129,546

 

 

97,531

 

 

93,640

 

 

 

 

400,325

 

 

245,668

 

Net revenue

 

 

122,349

 

 

135,721

 

 

174,858

 

 

192,665

 

 

130,679

 

 

 

 

625,593

 

 

572,175

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

66,067

 

 

53,413

 

 

82,427

 

 

79,729

 

 

61,762

 

 

 

 

281,636

 

 

237,109

 

Occupancy

 

 

12,114

 

 

12,827

 

 

17,507

 

 

17,037

 

 

13,698

 

 

 

 

59,485

 

 

55,559

 

Advertising

 

 

3,692

 

 

5,244

 

 

12,707

 

 

10,500

 

 

13,938

 

 

 

 

32,143

 

 

38,762

 

Direct operations

 

 

11,832

 

 

11,729

 

 

20,293

 

 

20,274

 

 

19,504

 

 

 

 

64,128

 

 

60,056

 

Depreciation and amortization

 

 

8,337

 

 

9,499

 

 

8,672

 

 

9,814

 

 

7,270

 

 

 

 

36,322

 

 

26,955

 

Other operating expense

 

 

24,002

 

 

23,645

 

 

18,787

 

 

16,377

 

 

23,452

 

 

 

 

82,811

 

 

68,473

 

Total operating expenses

 

 

126,044

 

 

116,357

 

 

160,393

 

 

153,731

 

 

139,624

 

 

 

 

556,525

 

 

486,914

 

Other expense (income)

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

54,978

 

 

50,149

 

 

42,193

 

 

38,341

 

 

28,550

 

 

 

 

185,661

 

 

97,334

 

Loss (income) from equity method investment

 

 

1,932

 

 

2,309

 

 

1,328

 

 

(1,584

)

 

(2,982

)

 

 

 

3,985

 

 

(3,658

)

Gain from equity method investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(135,387

)

Goodwill impairment

 

 

145,241

 

 

 

 

 

 

 

 

 

 

 

 

145,241

 

 

 

Loss on extinguishment of debt

 

 

689

 

 

3,702

 

 

 

 

 

 

 

 

 

 

4,391

 

 

40,206

 

Gain on change in fair value of contingent consideration

 

 

 

 

(11,354

)

 

4,014

 

 

(265

)

 

2,384

 

 

 

 

(7,605

)

 

6,209

 

Gain on sale of business

 

 

 

 

(68,443

)

 

 

 

 

 

 

 

 

 

(68,443

)

 

 

Total other expense (income)

 

 

202,840

 

 

(23,637

)

 

47,535

 

 

36,492

 

 

27,952

 

 

 

 

263,230

 

 

4,704

 

(Loss) income before income taxes

 

 

(206,535

)

 

43,001

 

 

(33,070

)

 

2,442

 

 

(36,897

)

 

 

 

(194,162

)

 

80,557

 

(Benefit) provision for income taxes

 

 

(20,142

)

 

17,348

 

 

(6,990

)

 

1,106

 

 

(8,018

)

 

 

 

(8,678

)

 

21,223

 

Net (loss) income

 

$

(186,393

)

$

25,653

 

$

(26,080

)

$

1,336

 

$

(28,879

)

 

 

$

(185,484

)

$

59,334

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) earnings per share

 

$

(4.60

)

$

0.63

 

$

(0.65

)

$

0.03

 

$

(0.72

)

 

 

$

(4.59

)

$

1.44

 

Diluted (loss) earnings per share

 

$

(4.60

)

$

0.63

 

$

(0.65

)

$

0.03

 

$

(0.72

)

 

 

$

(4.59

)

$

1.38

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

40,488

 

 

40,479

 

 

40,376

 

 

40,368

 

 

40,254

 

 

 

 

40,428

 

 

41,155

 

Diluted

 

 

40,488

 

 

40,835

 

 

40,376

 

 

41,308

 

 

40,254

 

 

 

 

40,428

 

 

43,143

 

Table 2 - Consolidated Balance Sheets

 

 

As of

 

Dec, 31

 

Sept 30,

 

Jun 30,

 

Mar 31,

 

Dec, 31

(in thousands, unaudited)

2022

 

2022

 

2022

 

2022

 

2021

ASSETS

Cash and cash equivalents

$

73,932

 

$

45,683

 

$

37,394

 

$

60,209

 

$

63,179

 

Restricted cash

 

91,745

 

 

144,020

 

 

97,465

 

 

110,118

 

 

98,896

 

Gross loans receivable

 

2,087,833

 

 

1,894,427

 

 

1,592,815

 

 

1,628,568

 

 

1,548,318

 

Less: Allowance for loan losses

 

(122,028

)

 

(102,743

)

 

(90,286

)

 

(98,168

)

 

(87,560

)

Loans receivable, net

 

1,965,805

 

 

1,791,684

 

 

1,502,529

 

 

1,530,400

 

 

1,460,758

 

Income taxes receivable

 

21,918

 

 

13,469

 

 

46,450

 

 

28,664

 

 

31,774

 

Prepaid expenses and other

 

53,057

 

 

65,167

 

 

25,370

 

 

40,112

 

 

42,038

 

Property and equipment, net

 

31,957

 

 

37,402

 

 

38,752

 

 

54,865

 

 

54,635

 

Investment in Katapult

 

23,915

 

 

25,848

 

 

28,157

 

 

29,484

 

 

27,900

 

Right of use asset - operating leases

 

61,197

 

 

64,683

 

 

64,602

 

 

114,305

 

 

116,300

 

Deferred tax assets

 

49,893

 

 

31,986

 

 

23,993

 

 

20,066

 

 

15,639

 

Goodwill

 

276,269

 

 

424,292

 

 

352,990

 

 

430,967

 

 

429,792

 

Intangibles, net

 

123,677

 

 

120,345

 

 

113,130

 

 

113,640

 

 

109,930

 

Other assets

 

15,828

 

 

12,774

 

 

8,558

 

 

9,535

 

 

9,755

 

Assets held for sale (1)

 

 

 

 

 

338,779

 

 

 

 

 

Total Assets

$

2,789,193

 

$

2,777,353

 

$

2,678,169

 

$

2,542,365

 

$

2,460,596

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

 

 

 

 

 

Accounts payable and accrued liabilities

$

73,827

 

$

66,723

 

$

81,423

 

$

84,783

 

$

121,434

 

Deferred revenue

 

32,259

 

 

25,111

 

 

23,425

 

 

24,265

 

 

21,649

 

Lease liability - operating leases

 

62,847

 

 

66,370

 

 

67,339

 

 

120,593

 

 

122,431

 

Contingent consideration related to acquisition

 

16,884

 

 

15,770

 

 

30,354

 

 

26,687

 

 

26,508

 

Income taxes payable

 

 

 

 

 

4

 

 

 

 

680

 

Accrued interest

 

38,460

 

 

18,048

 

 

34,970

 

 

16,481

 

 

34,974

 

Liability for losses on CSO lender-owned consumer loans

 

 

 

 

 

 

 

7,166

 

 

6,908

 

Debt

 

2,607,314

 

 

2,449,316

 

 

2,189,431

 

 

2,090,085

 

 

1,945,793

 

Other long-term liabilities

 

11,736

 

 

11,563

 

 

12,146

 

 

13,679

 

 

13,845

 

Deferred tax liabilities

 

 

 

 

 

12,360

 

 

5,839

 

 

6,044

 

Liabilities held for sale (1)

 

 

 

 

 

111,137

 

 

 

 

 

Total Liabilities

$

2,843,327

 

$

2,652,901

 

$

2,562,589

 

$

2,389,578

 

$

2,300,266

 

Total Stockholders' (Deficit) Equity

 

(54,134

)

 

124,452

 

 

115,580

 

 

152,787

 

 

160,330

 

Total Liabilities and Stockholders' (Deficit) Equity

$

2,789,193

 

$

2,777,353

 

$

2,678,169

 

$

2,542,365

 

$

2,460,596

 

 

 

 

 

 

 

(1) Assets held for sale and Liabilities held for sale represent the balance, as of June 30, 2022, for assets and liabilities, respectively, associated with the sale of the U.S. Legacy Direct Lending Business. The sale of the Legacy U.S. Direct Lending business closed in July 2022.

Table 3 - Consolidated Portfolio Performance

 

(in thousands, except percentages, unaudited)

 

Q4 2022

Q3 2022

Q2 2022(2)

Q1 2022

 

Q4 2021(1)

Gross loans receivable

 

 

 

 

 

 

 

Revolving LOC

 

$

1,284,515

 

$

1,129,387

 

$

1,128,372

 

$

1,015,338

 

 

$

914,113

 

Installment loans

 

 

803,318

 

 

765,040

 

 

652,468

 

 

613,230

 

 

 

634,205

 

Total gross loans receivable (3)

 

$

2,087,833

 

$

1,894,427

 

$

1,780,840

 

$

1,628,568

 

 

$

1,548,318

 

Lending Revenue:

 

 

 

 

 

 

 

Revolving LOC

 

$

81,170

 

$

77,037

 

$

96,582

 

$

91,023

 

 

$

85,558

 

Installment loans(4)

 

 

100,435

 

 

103,478

 

 

181,749

 

 

173,933

 

 

 

119,023

 

Total lending revenue

 

 

181,605

 

 

180,515

 

 

278,331

 

 

264,956

 

 

 

204,581

 

Lending Provision:

 

 

 

 

 

 

 

Revolving LOC

 

$

46,745

 

$

41,787

 

$

40,435

 

$

37,447

 

 

$

44,183

 

Installment loans(5)

 

 

46,442

 

 

33,510

 

 

86,484

 

 

57,435

 

 

 

47,529

 

Total lending provision

 

$

93,187

 

$

75,297

 

$

126,919

 

$

94,882

 

 

$

91,712

 

NCOs (6)

 

 

 

 

 

 

 

Revolving LOC

 

$

35,387

 

$

30,907

 

$

33,945

 

$

34,372

 

 

$

28,324

 

Installment loans(7)

 

 

38,168

 

 

31,372

 

 

71,056

 

 

60,386

 

 

 

48,487

 

Total NCOs

 

$

73,555

 

$

62,279

 

$

105,001

 

$

94,758

 

 

$

76,811

 

NCO rate (annualized) (6) (8)

 

 

 

 

 

 

 

Revolving LOC

 

 

11.6

%

 

10.8

%

 

12.8

%

 

14.4

%

 

 

14.0

%

Installment loans

 

 

19.6

%

 

17.6

%

 

44.8

%

 

38.8

%

 

 

48.8

%

Total NCO rate(9)

 

 

14.8

%

 

13.2

%

 

24.0

%

 

23.2

%

 

 

24.4

%

ALL rate (10)

 

 

 

 

 

 

 

Revolving LOC

 

 

6.1

%

 

6.0

%

 

6.7

%

 

7.0

%

 

 

7.5

%

Installment loans

 

 

5.4

%

 

4.6

%

 

8.1

%

 

5.5

%

 

 

4.2

%

Total ALL rate (11)

 

 

5.8

%

 

5.4

%

 

6.7

%

 

6.0

%

 

 

5.7

%

31+ days past-due rate (10)

 

 

 

 

 

 

 

Revolving LOC

 

 

3.3

%

 

4.1

%

 

4.1

%

 

3.7

%

 

 

3.2

%

Installment loans

 

 

9.6

%

 

10.2

%

 

9.2

%

 

9.0

%

 

 

8.6

%

Total past-due rate(12)

 

 

5.8

%

 

6.6

%

 

6.1

%

 

5.8

%

 

 

5.5

%

 

 

 

 

 

 

 

 

(1) On December 27, 2021, we acquired Heights Finance, which accounted for approximately $472 million of U.S. Direct Lending Installment loans as of December 31, 2021. As the period between December 27, 2021 and December 31, 2021 did not result in material loan performance, we have excluded Heights Finance from the table for the fourth quarter of 2021.

(2) Includes loan balances and activity classified as Held for Sale.

(3) Total combined gross loans receivable including receivables from installment loans originated by third-party lenders through CSO programs and guaranteed by the Company were $1,832.2 million, $1,673.0 million and $1,594.6 million as of June 30, 2022, March 31, 2022 and December 31, 2021, respectively, including installment loans – guaranteed by the Company of $51.3 million, $44.4 million and $46.3 million as of June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon the completion of the divestiture of the Legacy U.S. Direct Lending business. Total combined gross loans receivable and installment loans – guaranteed by the Company are non-GAAP measures. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures.”

(4) Includes lending revenue from installment loans originated by third-party lenders through CSO programs and guaranteed by the Company of $3.9 million, $48.3 million, $49.0 million and $47.3 million for the three months ended September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business.

(5) Includes provision from installment loans originated by third-party lenders through CSO programs and guaranteed by the Company of $0.0, $28.3 million, $21.7 million and $26.0 million for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business.

(6) NCOs presented above include $0.0 million, $0.5 million, $10.3 million, $5.0 million and $0.8 million for the three months ended December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively, related to the purchase accounting fair value discount, which are excluded from provision.

(7) Total consolidated NCOs included NCOs for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company of $1.6 million, $27.4 million, $21.5 million and $26.1 million for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business.

(8) We calculate NCO rate as total quarterly NCOs divided by Average gross loans receivable; then we annualize the rate. The amount and timing of recoveries are impacted by our collection strategies, which are based on customer behavior and risk profile and include direct customer communications and the periodic sale of charged off loans.

(9) Total consolidated NCO rate included the NCO rate for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company was 24.8%, 228.8%, 189.6% and 232.4% for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business.

(10) We calculate (i) Allowance for loan losses (ALL) rate and (ii) past-due rate as the respective totals divided by gross loans receivable at each respective quarter end.

(11) Total consolidated CSO liability for losses for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company was 15.7%, 16.1% and 14.9% for the three months ended June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. Total consolidated ALL and CSO liability for losses rate was 7.0%, 6.3% and 8.4% for the three months ended, June 30, 2022, March 31, 2022 and December 31, 2021, respectively.

(12) Total consolidated past-due rate included the past-due rate for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company was 2.6%, 4.5% and 3.1% for the three months ended June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business.

Table 4 - U.S. Direct Lending Segment - Operating Loss/Income

 

(in thousands, unaudited)

 

Three Months Ended,

 

 

Twelve Months Ended,

 

Dec 31,

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

 

Dec 31,

 

Dec 31,

 

2022

 

2022

 

2022

 

2022

 

2021

 

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

104,182

 

$

107,430

 

$

205,711

 

$

198,399

$

139,002

 

 

 

 

615,722

 

 

525,962

Provision for losses

 

 

44,117

 

 

32,073

 

 

97,563

 

 

66,825

 

57,925

 

 

 

 

240,578

 

 

166,033

Net revenue

 

 

60,065

 

 

75,357

 

 

108,148

 

 

131,574

 

81,077

 

 

 

 

375,144

 

 

359,929

Total operating expenses

 

 

80,803

 

 

76,067

 

 

115,633

 

 

110,941

 

93,085

 

 

 

 

383,444

 

 

338,708

Segment operating (loss) income

 

$

(20,738

)

$

(710

)

$

(7,485

)

$

20,633

$

(12,008

)

 

 

$

(8,300

)

$

21,221

Table 5 - U.S. Direct Lending Segment - Portfolio Performance

 

(in thousands, except percentages, unaudited)

 

Q4 2022

Q3 2022

Q2 2022(2)

Q1 2022

 

Q4 2021(1)

Gross loans receivable

 

 

 

 

 

 

 

Revolving LOC

 

$

 

$

 

$

58,471

 

$

49,077

 

 

$

52,532

 

Installment loans

 

 

773,380

 

 

739,100

 

 

627,651

 

 

589,652

 

 

 

137,782

 

Total gross loans receivable (3)

 

$

773,380

 

$

739,100

 

$

686,122

 

$

638,729

 

 

$

190,314

 

Lending Revenue:

 

 

 

 

 

 

 

Revolving LOC

 

$

 

$

2,210

 

$

28,145

 

$

26,913

 

 

$

27,911

 

Installment loans (4)

 

 

88,001

 

 

90,834

 

 

169,878

 

 

162,824

 

 

 

104,168

 

Total lending revenue

 

$

88,001

 

$

93,044

 

$

198,023

 

$

189,737

 

 

$

132,079

 

Lending Provision:

 

 

 

 

 

 

 

Revolving LOC

 

$

 

$

 

$

11,831

 

$

9,577

 

 

$

11,592

 

Installment loans (5)

 

 

42,523

 

 

29,045

 

 

83,181

 

 

54,711

 

 

 

44,585

 

Total lending provision

 

$

42,523

 

$

29,045

 

$

95,012

 

$

64,288

 

 

$

56,177

 

NCOs (6)

 

 

 

 

 

 

 

Revolving LOC

 

$

 

$

1,140

 

$

10,248

 

$

10,055

 

 

$

11,481

 

Installment loans (7)

 

 

34,664

 

 

27,311

 

 

68,152

 

 

57,739

 

 

 

45,729

 

Total NCOs

 

$

34,664

 

$

28,451

 

$

78,400

 

$

67,794

 

 

$

57,210

 

NCO rate (annualized) (6) (8)

 

 

 

 

 

 

 

Revolving LOC

 

 

%

 

15.6

%

 

76.4

%

 

79.2

%

 

 

88.4

%

Installment loans

 

 

18.4

%

 

16.0

%

 

44.8

%

 

63.6

%

 

 

132.8

%

Total NCO rate (9)

 

 

18.4

%

 

15.6

%

 

44.0

%

 

58.8

%

 

 

97.6

%

ALL rate (10)

 

 

 

 

 

 

 

Revolving LOC

 

 

%

 

%

 

25.1

%

 

26.7

%

 

 

25.9

%

Installment loans

 

 

5.2

%

 

4.4

%

 

8.1

%

 

5.4

%

 

 

17.7

%

Total ALL rate (11)

 

 

5.2

%

 

4.4

%

 

8.9

%

 

6.6

%

 

 

16.0

%

31+ days past-due rate (10)

 

 

 

 

 

 

 

Revolving LOC

 

 

%

 

%

 

17.4

%

 

19.1

%

 

 

19.2

%

Installment loans

 

 

9.9

%

 

10.5

%

 

20.5

%

 

19.0

%

 

 

19.0

%

Total past-due rate(12)

 

 

9.9

%

 

10.5

%

 

10.1

%

 

10.0

%

 

 

9.7

%

(1) On December 27, 2021, we acquired Heights Finance, which accounted for approximately $472 million of U.S. Direct Lending Installment loans as of December 31, 2021. As the period between December 27, 2021 and December 31, 2021 did not result in material loan performance, we have excluded Heights Finance from the table for the fourth quarter of 2021.

(2) Includes loan balances and activity classified as Held for Sale.

(3)Total combined gross loans receivable including receivables from installment loans originated by third-party lenders through CSO programs and guaranteed by the Company were $737.4 million, $683.1 million and $236.6 million as of June 30, 2022, March 31, 2022 and December 31, 2021, respectively, including installment loans – guaranteed by the Company of $51.3 million, $44.4 million and $46.3 million as of June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. Total combined gross loans receivable and installment loans – guaranteed by the Company are non-GAAP measures. For a description of each non-GAAP metric, see "Non-GAAP Financial Measures.”

(4) Includes lending revenue from installment loans originated by third-party lenders through CSO programs and guaranteed by the Company of $3.9 million, $48.3 million, $49.0 million and $47.3 million for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business.

(5) Includes provision from installment loans originated by third-party lenders through CSO programs and guaranteed by the Company of $28.3 million, $21.7 million and $26.0 million for the three months ended June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business.

(6) NCOs presented above include $0.0 million, $0.5 million, $10.3 million and $5.0 million, for the three months ended December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, respectively, related to the purchase accounting fair value discount, which are excluded from provision.

(7) Total NCOs included NCOs for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company of $1.6 million, $27.4 million, $21.5 million and $26.07 million for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business.

(8) We calculate NCO rate as total quarterly NCOs divided by Average gross loans receivable, then we annualize the rate. The amount and timing of recoveries are impacted by our collection strategies, which are based on customer behavior and risk profile and include direct customer communications and the periodic sale of charged off loans.

(9) Total NCO rate included the NCO rate for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company was 24.8%, 228.8%, 189.6% and 232.4% for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business.

(10) We calculate (i) Allowance for loan losses (ALL) rate and (ii) past-due rate as the respective totals divided by gross loans receivable at each respective quarter end.

(11)Total CSO liability for losses for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company was 0%, 15.7%, 16.1% and 14.9% for the three months ended September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business. Total U.S. Direct Lending ALL and CSO liability for losses rate was 8.9%, 6.6% and 16.0% for the three months ended June 30, 2022, March 31, 2022 and December 31, 2021, respectively.

(12) Total past-due rate included the past-due rate for installment loans originated by third-party lenders through CSO programs and guaranteed by the Company was 2.6%, 4.5% and 3.1% for the three months ended June 30, 2022, March 31, 2022 and December 31, 2021, respectively. All balances in connection with the CSO programs were disposed of on July 8, 2022 upon closing of the divestiture of the Legacy U.S. Direct Lending business.

 

 

Table 6 - Canada Direct Lending Segment - Operating Income

 

(in thousands, unaudited)

 

Three Months Ended,

 

 

Twelve Months Ended,

 

Dec 31,

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

 

Dec 31,

 

Dec 31,

 

2022

 

2022

 

2022

 

2022

 

2021

 

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

77,743

$

78,979

$

75,540

$

71,488

$

70,529

 

 

 

303,750

 

257,039

Provision for losses

 

 

33,607

 

32,947

 

26,021

 

21,992

 

23,204

 

 

 

114,567

 

54,997

Net revenue

 

 

44,136

 

46,032

 

49,519

 

49,496

 

47,325

 

 

 

189,183

 

202,042

Total operating expenses

 

 

30,829

 

26,773

 

28,332

 

27,021

 

27,423

 

 

 

112,955

 

103,513

Segment operating income

 

$

13,307

$

19,259

$

21,187

$

22,475

$

19,902

 

 

$

76,228

$

98,529

Table 7 - Canada Direct Lending Segment - Portfolio Performance

 

(in thousands, except percentages, unaudited)

 

Q4 2022

Q3 2022

Q2 2022

Q1 2022

 

Q4 2021

Gross loans receivable:

 

 

 

 

 

 

 

Revolving LOC

 

$

451,077

 

$

439,117

 

$

442,738

 

$

424,485

 

 

$

402,405

 

Installment loans

 

 

29,938

 

 

25,941

 

 

24,817

 

 

23,578

 

 

 

24,792

 

Total gross loans receivable

 

$

481,015

 

$

465,058

 

$

467,555

 

$

448,063

 

 

$

427,197

 

Lending Revenue:

 

 

 

 

 

 

 

Revolving LOC

 

$

49,915

 

$

50,251

 

$

47,591

 

$

45,455

 

 

$

43,943

 

Installment loans

 

 

12,434

 

 

12,645

 

 

11,868

 

 

11,109

 

 

 

11,416

 

Total lending revenue

 

$

62,349

 

$

62,896

 

$

59,459

 

$

56,564

 

 

$

55,359

 

Lending Provision:

 

 

 

 

 

 

 

Revolving LOC

 

$

29,620

 

$

28,408

 

$

22,641

 

$

19,156

 

 

$

20,080

 

Installment loans

 

 

3,919

 

 

4,466

 

 

3,303

 

 

2,723

 

 

 

2,945

 

Total lending provision

 

$

33,539

 

$

32,874

 

$

25,944

 

$

21,879

 

 

$

23,025

 

NCOs

 

 

 

 

 

 

 

Revolving LOC

 

$

26,715

 

$

23,652

 

$

20,160

 

$

21,590

 

 

$

15,112

 

Installment loans

 

 

3,504

 

 

4,061

 

 

2,904

 

 

2,647

 

 

 

2,758

 

Total NCOs

 

$

30,219

 

$

27,713

 

$

23,064

 

$

24,237

 

 

$

17,870

 

NCO rate (annualized) (1)

 

 

 

 

 

 

 

Revolving LOC

 

 

24.0

%

 

21.6

%

 

18.4

%

 

20.8

%

 

 

15.6

%

Installment loans

 

 

50.0

%

 

64.0

%

 

48.0

%

 

43.6

%

 

 

44.8

%

Total NCO rate

 

 

25.6

%

 

23.6

%

 

20.0

%

 

22.0

%

 

 

17.6

%

ALL rate (2)

 

 

 

 

 

 

 

Revolving LOC

 

 

8.4

%

 

7.9

%

 

7.2

%

 

7.2

%

 

 

8.0

%

Installment loans

 

 

10.4

%

 

10.3

%

 

9.7

%

 

8.8

%

 

 

8.0

%

Total ALL rate

 

 

8.5

%

 

8.0

%

 

7.4

%

 

7.3

%

 

 

8.0

%

31+ days past-due rate (2)

 

 

 

 

 

 

 

Revolving LOC

 

 

4.1

%

 

5.1

%

 

4.2

%

 

4.3

%

 

 

3.2

%

Installment loans

 

 

1.9

%

 

1.0

%

 

0.8

%

 

1.0

%

 

 

0.9

%

Total past-due rate

 

 

4.0

%

 

4.8

%

 

4.0

%

 

4.1

%

 

 

3.1

%

 

 

 

 

 

 

 

 

(1) We calculate NCO rate as total quarterly NCOs divided by Average gross loans receivable; then we annualize the rate. The amount and timing of recoveries are impacted by our collection strategies, which are based on customer behavior and risk profile and include direct customer communications and the periodic sale of charged off loans.

(2) We calculate ALL rate and past-due rate as the respective totals divided by gross loans receivable at each respective quarter end.

Table 8 - Canada POS Lending Segment - Operating Loss/Income

 
 

(in thousands, unaudited)

 

Three Months Ended,

 

 

Twelve Months Ended,

 

Dec 31,

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

 

Dec 31,

 

Dec 31,

 

2022

 

2022

 

2022

 

2022

 

2021

 

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

35,273

$

27,710

$

23,154

$

20,309

 

$

14,788

 

 

 

 

106,446

 

34,842

 

Provision for losses

 

 

17,125

 

13,378

 

5,963

 

8,714

 

 

12,511

 

 

 

 

45,180

 

24,638

 

Net revenue

 

 

18,148

 

14,332

 

17,191

 

11,595

 

 

2,277

 

 

 

 

61,266

 

10,204

 

Total operating expenses

 

 

14,412

 

13,519

 

16,427

 

15,768

 

 

19,116

 

 

 

 

60,126

 

44,693

 

Segment operating income (loss)

 

$

3,736

$

813

$

764

$

(4,173

)

$

(16,839

)

 

 

$

1,140

$

(34,489

)

Table 9 - Canada POS Lending Segment - Portfolio Performance

 

(in thousands, except percentages, unaudited)

 

Q4 2022

Q3 2022

Q2 2022

Q1 2022

 

Q4 2021

Revolving LOC

 

 

 

 

 

 

 

Total gross loans receivable

 

$

833,438

 

$

690,270

 

$

627,163

 

$

541,776

 

 

$

459,176

 

Total lending revenue

 

$

31,255

 

$

24,575

 

$

20,846

 

$

18,655

 

 

$

13,704

 

Total lending provision

 

$

17,125

 

$

13,379

 

$

5,963

 

$

8,714

 

 

$

12,511

 

NCOs (1)

 

$

8,672

 

$

6,114

 

$

3,537

 

$

2,727

 

 

$

1,731

 

NCO rate (annualized) (1)(2)

 

 

4.4

%

 

3.6

%

 

2.4

%

 

2.0

%

 

 

2.0

%

ALL rate (3)

 

 

4.9

%

 

4.8

%

 

4.5

%

 

5.1

%

 

 

4.8

%

31+ days past-due rate (3)

 

 

2.9

%

 

3.6

%

 

2.8

%

 

1.8

%

 

 

1.5

%

(1) NCOs presented above include $0.8 million for the three months ended December 31, 2021 of NCOs related to the purchase accounting fair value discount, which are excluded from provision.

(2) We calculate NCO rate as total quarterly NCOs divided by Average gross loans receivable then annualized the rate. The amount and timing of recoveries are impacted by our collection strategies, which are based on customer behavior and risk profile and include direct customer communications and the periodic sale of charged off loans.

(3) We calculate ALL rate and past-due rate as the respective totals divided by gross loans receivable at each respective quarter end.

Non-GAAP Financial Measures

In addition to the financial information prepared in conformity with U.S. GAAP, we provide certain “non-GAAP financial measures,” including:

  • Adjusted Net Income ("ANI") and Adjusted Earnings Per Share, or the Adjusted Earnings Measures (net income plus or minus certain legal and other costs, income or loss from equity method investment, goodwill and intangible asset impairments, transaction-related costs, restructuring costs, loss on extinguishment of debt, adjustments related to acquisition accounting, share-based compensation, intangible asset amortization, gain on sale of business, changes in fair value of contingent consideration, certain tax adjustments and cumulative tax effect of applicable adjustments, on a total and per share basis); and
  • Gross Combined Loans Receivable (includes loans originated by third-party lenders through CSO programs which are not included in the Consolidated Financial Statements). As a result of the sale of the Legacy U.S. Direct Lending business, we no longer guarantee loans originated by third-party lenders through CSO programs.

We believe that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of our operations. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of the business that, when viewed with our U.S. GAAP results, provide a more complete understanding of factors and trends affecting the business.

We believe that investors regularly rely on non-GAAP financial measures to assess operating performance and that such measures may highlight trends in the business that may not otherwise be apparent when relying on financial measures calculated in accordance with U.S. GAAP. In addition, we believe that the adjustments shown above are useful to investors to allow them to compare our financial results during the periods shown without the effect of each of these income or expense items. In addition, we believe that these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of public companies in our industry, many of which present non-GAAP financial measures when reporting their results.

In addition to reporting loans receivable information in accordance with U.S. GAAP, we provide Gross Combined Loans Receivable consisting of owned loans receivable plus loans originated by third-party lenders through the CSO programs, which we guaranteed but do not include in the Consolidated Financial Statements. Management believes this analysis provides investors with important information needed to evaluate overall lending performance. As noted above, we no longer provide these guarantees to third-party lenders as a result of the sale of the Legacy U.S. Direct Lending business.

Non-GAAP financial measures should not be considered as alternatives to income, segment operating income or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flows from operating activities or any other liquidity measure derived in accordance with U.S. GAAP. Readers should consider the information in addition to, but not instead of or superior to, the financial statements prepared in accordance with U.S. GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.

Description and Reconciliations of Non-GAAP Financial Measures

Non-GAAP financial measures have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our income or cash flows as reported under U.S. GAAP. Some of these limitations are:

  • they do not include cash expenditures or future requirements for capital expenditures or contractual commitments;
  • they do not include changes in, or cash requirements for, working capital needs;
  • they do not include the interest expense, or the cash requirements necessary to service interest or principal payments on debt;
  • depreciation and amortization are non-cash expense items reported in the statements of cash flows; and
  • other companies in our industry may calculate these measures differently, limiting their usefulness as comparative measures.

We calculate Adjusted Earnings per Share utilizing diluted shares outstanding at quarter-end. If we record a loss under U.S. GAAP, shares outstanding utilized to calculate Diluted Loss per Share are equivalent to basic shares outstanding. Shares outstanding utilized to calculate Adjusted Earnings per Share reflect the number of diluted shares we would have reported if reporting net income under U.S. GAAP. If we record an Adjusted Loss per Share, shares outstanding utilized to calculate Diluted Loss per Share are equivalent to basic shares outstanding.

We believe investors use the non-GAAP measures we present to analyze operating performance and to evaluate our ability to incur and service debt and the capacity for making capital expenditures.

Table 10 - Reconciliation of Net Income and Diluted Earnings per Share to Adjusted Net Income and Adjusted Diluted Earnings per Share, non-GAAP measures

 

 

 

Three Months Ended,

 

Twelve Months Ended,

 

 

Dec 31,

 

Sept 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

 

Dec 31,

 

Dec 31,

(in thousands, except per share data, unaudited)

 

2022

 

2022

 

2022

 

2022

 

2021

 

2022

 

2021

Net (loss) income

 

$

(186,393

)

$

25,653

 

$

(26,080

)

$

1,336

 

$

(28,879

)

 

($

185,484

)

$

59,334

 

Adjustments:

 

 

 

 

 

 

 

 

 

Restructuring costs (1)

 

 

13,084

 

 

739

 

 

1,146

 

 

1,069

 

 

1,303

 

 

 

16,038

 

 

12,717

 

Legal and other costs (2)

 

 

406

 

 

46

 

 

950

 

 

87

 

 

1,764

 

 

 

1,489

 

 

2,134

 

Loss (income) from equity method investment (3)

 

 

1,932

 

 

2,309

 

 

1,328

 

 

(1,584

)

 

(2,982

)

 

 

3,985

 

 

(3,658

)

Gain from equity method investment (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(135,387

)

Transaction costs (5)

 

 

1,116

 

 

10,063

 

 

(168

)

 

168

 

 

8,924

 

 

 

11,179

 

 

15,406

 

Acquisition-related adjustments (6)

 

 

(2,713

)

 

(2,883

)

 

3,371

 

 

221

 

 

4,162

 

 

 

(2,004

)

 

13,949

 

Change in fair value of contingent consideration (7)

 

 

 

 

(11,355

)

 

4,014

 

 

(264

)

 

2,384

 

 

 

(7,605

)

 

6,209

 

Loss on extinguishment of debt (8)

 

 

689

 

 

3,702

 

 

 

 

 

 

 

 

 

4,391

 

 

42,262

 

Share-based compensation (9)

 

 

3,998

 

 

1,448

 

 

4,417

 

 

4,093

 

 

3,828

 

 

 

13,956

 

 

13,976

 

Intangible asset amortization (10)

 

 

3,101

 

 

3,151

 

 

3,524

 

 

2,977

 

 

1,811

 

 

 

12,753

 

 

6,282

 

Gain on sale of business (11)

 

 

 

 

(68,443

)

 

 

 

 

 

 

 

 

(68,443

)

 

 

Goodwill impairment (12)

 

 

145,241

 

 

 

 

 

 

 

 

 

 

 

145,241

 

 

 

Cumulative tax effect of adjustments (13)

 

 

(12,745

)

 

23,677

 

 

(3,788

)

 

(1,828

)

 

(4,603

)

 

 

5,316

 

 

8,455

 

Adjusted net (loss) income

 

$

(32,284

)

$

(11,893

)

$

(11,286

)

$

6,275

 

$

(12,288

)

 

$

(49,188

)

$

41,679

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(186,393

)

$

25,653

 

$

(26,080

)

$

1,336

 

$

(28,879

)

 

($

185,484

)

$

59,334

 

Diluted weighted average shares outstanding

 

 

40,488

 

 

40,835

 

 

40,376

 

 

41,308

 

 

40,254

 

 

 

40,428

 

 

43,143

 

Adjusted diluted weighted average shares outstanding

 

 

40,488

 

 

40,835

 

 

40,376

 

 

41,308

 

 

42,389

 

 

 

40,428

 

 

43,143

 

Diluted (loss) earnings per share

 

$

(4.60

)

$

0.63

 

$

(0.65

)

$

0.03

 

$

(0.72

)

 

$

(4.59

)

$

1.38

 

Per share impact of adjustments to net income (loss)

 

 

3.80

 

 

(0.92

)

 

0.37

 

 

0.12

 

 

0.43

 

 

 

3.37

 

 

(0.41

)

Adjusted diluted (loss) earnings per share

 

$

(0.80

)

$

(0.29

)

$

(0.28

)

$

0.15

 

$

(0.29

)

 

($

1.22

)

$

0.97

 

(1)

Restructuring costs primarily related to U.S. and Canada store closures and other cost saving initiatives.

(2)

Legal and other costs primarily related to settlement costs related to certain legal matters.

(3)

Share of Katapult's U.S. GAAP net income or loss, recognized on a one quarter lag.

(4)

Gain on investment in Katapult recorded as a result of the completion of its reverse merger with FinServ.

(5)

Transaction costs primarily related to the sale of the Legacy U.S. Direct Lending business in July 2022, the acquisition of First Heritage in July 2022 and the acquisition of Heights Finance in December 2021.

(6)

During 2022, acquisition-related adjustments related to the Heights Finance and First Heritage acquisitions.

 

During 2022 and 2021, acquisition-related adjustments related to the Flexiti acquisition.

(7)

Adjustments related to the fair value of the contingent consideration related to the acquisition of Flexiti.

(8)

On July 30, 2021, we entered into new 7.50% Senior Secured Notes due 2028, which were used on August 12, 2021 to extinguish the 8.25% Senior Secured Notes due 2025. During the three and nine months ended December 30, 2021, $40.2 million from the loss on the extinguishment of debt was due to the early redemption of the 8.25% Senior Secured Notes due 2025. An additional $2.1 million of interest was incurred for the year ended December 30, 2021, which represents interest on the 8.25% Senior Secured Notes due 2025 for the period between July 30, 2021 and August 12, 2021, the period during which the 8.25% Senior Secured Notes and 7.50% Senior Secured Notes were outstanding.

 

During three months September 30, 2022, $3.1 million of the loss on extinguishment of debt was due to the early extinguishment of the U.S. SPV on July 8, 2022 upon the completion of the divestiture of our Legacy U.S.Direct Lending business to Community Choice Financial, and $0.6 million was due to the extinguishment of the Heights Finance SPV on July 15, 2022.

 

During three months December 31, 2022, $0.7 million of the loss on extinguishment of debt was due to the Flexiti SPF loan settlement.

(9)

Estimated fair value of share-based awards was recognized as non-cash compensation expense on a straight-line basis over the vesting period.

(10)

Intangible asset amortization primarily included amortization of identifiable intangible assets established in connection with the acquisitions of Flexiti in March 2021, Heights Finance in December 2021 and First Heritage in July 2022.

(11)

Gain on the divestiture of its Legacy U.S. Direct Lending business to Community Choice Financial in July 2022.

(12)

Goodwill impairment charge of $107.8 million recorded on the U.S. Direct Lending reporting unit and $37.4 million recorded on the Canada POS Lending reporting unit during the fourth quarter of 2022.

(13)

Cumulative tax effect of adjustments included in Reconciliation of Net (loss) income to Adjusted net (loss) income table is calculated using the estimated incremental tax rate by country.

Forward-Looking Statements

This press release contains forward-looking statements. These forward-looking statements include projections, estimates and assumptions about various matters, such as future financial and operational performance, including our ability to provide long-term value and return to our investors, reduction in operating expenses and our belief in the usefulness of the various non-GAAP financial measures used in this release. In addition, words such as “guidance,” “estimate,” “anticipate,” “believe,” “forecast,” “step,” “plan,” “predict,” “focused,” “project,” “is likely,” “expect,” "anticipate," “intend,” “should,” “will,” “confident,” variations of such words and similar expressions are intended to identify forward-looking statements. Our ability to achieve these forward-looking statements is based on certain assumptions, judgments and other factors, both within and outside of our control, that could cause actual results to differ materially from those in the forward-looking statements, including: risks relating to the uncertainty of projected financial and operational information and forecasts, including errors in our internal forecasts; our ability to manage growth; our dependence on third-party lenders to provide the cash we need to fund our loans and our ability to affordably access third-arty financing; our level of indebtedness; the effects of competition on our business; our ability to attract and retain customers; global economic, market, financial, political or health conditions or events; actions of regulators and the negative impact of those actions on our business; our ability to successfully integrate acquired businesses; our ability to protect our proprietary technology and analytics and keep up with that of our competitors; disruption of our information technology systems that adversely affect our business operations; ineffective pricing of the credit risk of our prospective or existing customers; inaccurate information supplied by customers or third parties that could lead to errors in judging customers’ qualifications to receive loans; improper disclosure of customer personal data; failure of third parties who provide products, services or support to us; disruption to our relationships with banks and other third-party electronic payment solutions providers as well as other factors discussed in our filings with the Securities and Exchange Commission. These projections, estimates and assumptions may prove to be inaccurate in the future. These forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. There may be additional risks that we presently do not know or that we currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual future results. We undertake no obligation to update, amend or clarify any forward-looking statement for any reason.

All product names, logos, brands, trademarks and registered trademarks are property of their respective owners.

(CURO-NWS)

Contacts

Investor Relations:

Izzy Dawood

Chief Financial Officer

Phone: 844-200-0342

Email: IR@curo.com

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